On the one hand, the global political world has witnessed the strength of female leadership. Be it New Zealand (Jacinda Ardern), Taiwan (Tsai Ing-Wen), Germany (Angela Merkel), Finland (Sanna Marin), Iceland (Katrín Jakobsdóttir), Norway (Erna Solberg), Denmark (Mette Frederiksen) or Bangladesh (Sheikh Hasina). Contemporary history has also presented us with such heads of state; Indira Gandhi (India), Golda Meir (Israel) and Benazir Bhutto (Pakistan).
On the corporate front, women are constantly breaking the quintessential glass ceiling and rising up as strong leaders.
Yet, the pandemic took a disproportionate toll on working women and intensified the challenges they already face. Research by McKinsey on Corporate America showed how women have been negatively impacted. Women—especially women of colour— were more likely to have been laid off, stalling their careers and jeopardizing their financial security. Working mothers have always worked a “double shift”—a full day of work, followed by hours spent caring for children and doing household labour. When the supports that made this possible—school and childcare— were upended, they were forced to scale back on work, derailing their career trajectories and exacerbating the gender wage gap.
This was all the more telling in industries which gave substantial representation to women, but were hard hit: retail, travel, hospitality.
#1: Gender equality is one area where businesses are increasingly striving toward and investors are considering.
The United Nations Sustainable Development Goal Number 5 describes gender equality as both a “fundamental human right,” and as the “foundation for a prosperous world.”
Societies that tap into the full potential of their populations are more competitive. The same principles hold in the business world, where women remain underrepresented and underpaid. Discriminatory companies not only deny equity and access, but they also act against their own best interests. Gender diversity can positively affect talent acquisition and retention, customer alignment, and brand strength.
Research shows that combining people of different backgrounds results in “cognitive diversity,” which enhances collective problem-solving. McKinsey and Credit Suisse have each produced research showing that companies serious about gender diversity and inclusion achieve superior financial results.
#2: Gender diversity creates positive benefits when society believes in its intrinsic value, and not just as a mere obligation.
Professor Letian Zhang of Harvard Business School in his research of 1,069 leading firms across 35 countries and 24 industries, found that gender diversity relates to more productive companies, as measured by market value and revenue, only in contexts where it is viewed as “normatively” accepted.
(In the energy sector in the Middle East, which has historically not been gender-inclusive, firms’ gender diversity was unrelated to company performance.)
Normative acceptance means a widespread cultural belief that gender diversity is important. There were positive effects of diversity in societies with normative acceptance of working women, but not in societies with only regulatory support. Though regulatory support of working women is correlated with normative acceptance, they are not the same. Some countries have strong cultural support, but few legal structures in place. Others have established legal structures, but cultures that are strongly male-dominant.
(Japan has a patriarchal work culture but some of the most generous parental and homecare leave policies globally. Such countries do not much benefit as much from gender diversity when compared with firms in places like Western Europe that have more cultural acceptance.)
#3:
Dan Lefkovitz, strategist for Morningstar's Indexes group, believes that good research on diversity and inclusion must go beyond the numbers.
It is insufficient to view it only as the number of women represented at various levels of a workforce. Policies and practices also must play a role. It was found that companies demonstrating a commitment to gender equality have achieved above-market returns with lower risk. You can read about it in this paper Investing Inclusively: Building Shareholder Value Through Gender Diversity.
